He looks to one indicator: The percentage of stocks above their 50-day moving average. In June, around 90 percent of stocks were above their 50-day moving average. Now, just 23 percent are, which is the lowest that reading has been since November 2012.

"As a sign of internal exhaustion, we view this as a buy signal," Wald wrote in a recent note.

Gina Sanchez, founder of Chantico Global, doesn't believe that stocks are trading at a discount despite indicators saying they are oversold.

"We're still not screamingly cheap yet," said Sanchez, a CNBC contributor. "We're right at about fair value now."

She expects that the S&P will keep falling, which "should take out what are the remaining market participants that are holding on."